An Integrated Supply Chain Management Strategy

Abstract

Nissan is the world’s fourth largest car producer, making some 3 million vehicles annually from 36 plants in 22 countries. In line with the corporation goal of globalisation a plant was established to produce cars at Sunderland in 1984 and first cars produced in 1986. The aim of the Sunderland plant is “to build profitably the highest quality car sold in Europe, to achieve the maximum possible customer satisfaction and ensure the prosperity of the company and its staff!” Since 1986, when 6000 vehicles were produced from kits, the plant has grown in both volume and integration. From 1992 two models will be produced, totalling 200,000 cars per annum with 3,500 people employed.

Throughout this period there have been various phases of supply logistics. After the successful first year an aggressive localisation programme started. NMUK has now achieved in excess of 80% local content. Parts are sourced from 170 suppliers in the UK and Europe. In order to meet the stated profitability and customer satisfaction goals NMUK first controlled its inventory and has subsequently targeted efforts at eliminating the need for it. Currently inventory is turned over more than 90 times a year.

This has been achieved through long term supplier relationships developed through a policy of single sourcing and mutual dependence. In line with this, many parts are now on a synchronous delivery system. In general parts ordering and delivery is very frequent. All deliveries are on a timed basis.

NMUK efforts in the medium term will now be focused on further aggressive inventory and leadtime reduction. In order to successfully achieve this we will work with suppliers to reduce order leadtimes, simultaneously addressing logistic improvements to ensure overall cost reduction on a case by case basis. It is recognised that different solutions will be required depending on both supplier location and parts characteristics.

Making cars in high volume is a material logistics exercise and the success of NMUK is dependent upon the success of this strategy.